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It’s not ‘everyone’s cup of tea’ in Pakistan!
January 14, 2011
Pakistan has become the third biggest consumer of tea in the world, as its masses who rank among the lowest in terms of economic growth and progress, consumed more than Rs 23 billion worth of tea, in order to ward of that weary sluggishness, by ushering in that cheetah active feeling. This amount refers to legally imported teas, while considering the illegally obtained brew; one might as well envisage at least Rs 34 billion worth of brew consumed in 2010, amounting to more than Rs16 billion.
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Pakistan has become the third biggest consumer of tea in the world, as its masses who rank among the lowest in terms of economic growth and progress, consumed more than Rs 23 billion worth of tea, in order to ward of that weary sluggishness, by ushering in that cheetah active feeling. This amount refers to legally imported teas, while considering the illegally obtained brew; one might as well envisage at least Rs 34 billion worth of brew consumed in 2010, amounting to more than Rs16 billion.
Advantages of consuming the delightful and nourishing brew has divided the government versus the united front of tea merchants and masses. Officially tea is considered to be something of a luxury!; subject to heavy duty and taxes. While masses, common and sundry, consider it as their daily staple, since a cup of hot brew is considered as a rare luxury among the poor and labor, catering to the food needs of patients and children. Increase in the demand of the brew, in tandem with rampant inflation, redeems the united stance of masses and traders, as due to heavy taxation and duties levied on tea, smuggling of the brew has increased two fold; with 45% of need being fulfilled by the smuggled lot.
Pakistan tea association has just released annual statistics regarding legally imported tea, according to which, 1,18,000 tons of tea, worth approximately U$.280 million was consumed during the period, Jan-Dec 2010. Australia is known to lead the world in tea consumption at 2.7 kilo per head, followed by Sri-Lanka at 1.45 kilogram, Japan with 100 gram, India 500 grams, China 300 grams, while Turkey ranks at 2.15 kilo per had consumption.
Official statistics indicate that during the first five months of fiscal year, July 2009-Nov2010, legal tea imports have registered an increase of 20%. 36,858 tons of teas, accounting for U$. 900 million was imported. While during the same period of fiscal year 2010, 44, 293 tons of tea worth more than U$.100 million was imported.
However any import of legal teas is strongly discouraged, when authorities refuse/ are unable to stop smuggling of the brew from Afghanistan on basis of Afghan transit trade agreement (ATTA). The former chairman of Pakistan Tea Association (PTA), Hamid Saeed Khawaja informs that Pakistan imported 92,000 tons of black tea, compared to 1,20,000 tons of tea imported by Afghanistan. This lead by Afghanistan, with a mere 300 million population, creates a good deal of reservations, since the country subsists on green tea rather than the black tea. The simple answer lies in the fact that black tea supplies of Afghanistan are smuggled to Pakistan.
Statistics show that during the 11 months of calendar year 2010, after the ATTA, an increase of 113 million kg of tea was registered, which was 27% greater than that of Pakistan. ; While in 2009, tea imports for Afghanistan amounted to 89 million kilos. This is badly affecting local tea industry, which imports legal tea contributing about Rs. 9 billion in tax revenues. Government, as usual simply turns a deaf ear to the demands of tea industry,.
It is pertinent to mention that during the fiscal year 2010 Pakistan imported tea from 22 countries. Of the overall demand, 58.44% was imported from Kenya, 17% from India, while the remaining balance is distributed among other countries. While 2.38 million tons of green tea worth U$.2. 84 million was also imported.
Hamid Saeed Khawaja, has informed that tea importers were paying 42 various taxes and duties to government, and had asked government to reduce this rate by 50%, which would be able to counter smuggling of the commodity. Since the smuggling value of tea amounts to 12% to 15%, while a reduction of 20% could increase tax revenue. He also informs that exchequer loses Rs.6 billion to Rs 7 billion annually. He contends that even if the government gives a two-month tax holiday m just to discourage the trend of smuggling, it could stop losing more than Rs.15 billion worth of comparative annual taxation. This would also reduce the tea price to Rs.50 – Rs.60 per kilo
It is advised, that in order to ameliorate the situation, the government would have to / should take conducive steps and evolve prudent strategy to avoid any severe harm to the tea trade, suffocating official revenue as well. He also advises a reduction in import duty tom 9% from its current 10%, and taxes to 3% from current of 15% , in order to discourage the bad trend of smuggling.
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